Skyview Capital, a global private equity firm, has built a track record of success executing corporate carve-outs.
Based in Century City, Skyview has completed over 20 platform and add-on investments since inception with a focus in the technology, telecom, and services verticals. Skyview has focused its efforts on corporate carveouts since its founding in 2005.
When large companies face the problem of underperforming business units, or simply seek to devote more resources to their core business offerings, many explore a corporate carve out transaction as an effective solution. These situations arise in all kinds of markets. But particularly in the current bear market, we may see an increase in the number of corporate carveouts completed as a way to help parent companies focus on their core businesses.
Skyview’s approach to carveouts takes all stakeholders into account - the parent company, the employees, and the investors. Once the transaction is complete, the parent company can focus on its primary business lines. The employees of the carved-out business unit receive the attention and focus of a standalone entity. The shareholders of the parent company are satisfied the management team can focus on the core business without distractions from a business unit that is not generating the desired margin or growth profile.
It is important to note that no one carve-out is like the other. It is challenging and complex, and lawsuits and very specific tax implications are not unusual if it is not done right. Skyview Capital prides itself on delivering custom made solutions to each and every transaction it completes. Any time a company enters a sell-side process, there is uncertainty and risk, including potential lawsuits, associated with the process, timeline and ultimate outcome. Skyview Capital helps lower the ambiguity and risks of the process by having a track record of expertise, speed and certainty to close. Given the unique nature of corporate carveouts, it is important to partner with a buyer that understands the challenges and complexities that come with removing a subsidiary from a parent company and then standing it up as its own separate entity.
The complexity arises because it is rare for a unit to be operating as a complete stand-alone group inside the parent company. Oftentimes, the unit is co-mingled within the parent company’s broader ecosystem, resulting in a business unit that does not have true standalone financial statements. In some transactions, the seller provides a carve-out financial audit of the unit where the revenues, costs and corporate allocations (costs that are part of the services provided by the corporate parent) are all best accounted for to help give the buyer financial detail into the unit they are acquiring.
Once a carve-out is completed, that is when the real work begins of standing this business up on its own. Skyview has an extensive global back-office team that handles all the finances, legal, HR, IT and other support departments that all firms need. Skyview also has a team of former C-Suite executives and private equity operating partners that have developed expertise stabilizing and growing companies to sizable scale. With every transaction, it is imperative to clearly communicate to key stakeholders (lenders, vendors, customers, employees) that the business has changed ownership and will continue to operate in ordinary course (if not better). This helps to ensure a smooth transition to operating as an independent entity and prevent any unnecessary lawsuits. Skyview’s bench of operating executives is highly skilled at managing and communicating effectively during these times of change.
Corporate carve-outs can be seen as win-wins for both sellers and buyers, but it is elaborate. Hence, it is paramount to partner with an acquiror, like Skyview Capital, who understands the unique challenges of purchasing a corporate carveout, including potential lawsuits. By seeing and understanding all facets of the divesture, Skyview ensures a successful outcome for all parties involved.
